Oct
13

All 50 States Initiate Investigation into Mortgage Practices

October 13, 2010

As Chicagoland Real Estate Forum reported yesterday, state attorneys general offices in all 50 states and the District of Columbia launched a joint investigation into the mortgage industry today.

The investigation comes in response to the robo-signing controversy, in which lenders used unchecked or fraudulent paperwork to seize homes during this foreclosure crisis.

Stop foreclosuresUsing robo-signers “may constitute a deceptive act and/or an unfair practice or otherwise violate state laws,” the attorneys general said in a joint statement.

Alabama initially didn’t join the investigation but quickly came aboard.

One in every four homes sold in the second quarter of this year was a foreclosed property. Experts believe this investigation could halt all foreclosure proceedings and damage the already fragile housing market.

If the states get their way, mortgage lenders will have to change the way in which they handle foreclosures as well as pay for the mistakes that have already been made. Some foreclosures could be overturned.

Several banks have already suspended foreclosure proceedings in some or all of the states including Bank of America Corp., JP Morgan Chase and Ally Financial Inc.’s GMAC Mortgage Unit.

Other banks, like Citigroup Inc. and Wells Fargo & Co. are going on with foreclosure proceedings, saying they have done nothing wrong.

Guess we’ll see.

Categories: Featured, Mortgages

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